The Local Pension Board of Bromley Council met on Monday 12 May 2025 to review the Pension Fund's annual report, risk register, and performance monitoring report. The Board also considered the report from the Pensions Committee meeting held on 27 February 2025.

Local Pension Board Annual Report 2024/25

The Board reviewed its Annual Report for 2024/25, which detailed its activities and work plan for the upcoming year. The report highlighted that no significant areas of risk or concern had been raised by the Board with the Scheme Manager during the reporting period. No declarations of interest were made at the formal meetings of the Board. All costs associated with the Board's administration were contained within existing resources. The Board's work plan for 2025-26 includes tasks such as reviewing monthly pensions administration reports, monitoring employer compliance, considering fund investment reports, and reviewing audit outcomes.

Pensions Risk Register Review

The Board was asked to review the draft risk register for the Bromley Pension Fund. This register is a requirement of The Pensions Regulator's General Code of Practice and aims to identify, evaluate, and control risks to ensure they are managed effectively. The revised register includes risks related to mandatory pooling, conflicts of interest, employer data, cyber risks, and pension scams. Previous risks, such as Market Risk and Investment Manager Underperformance, have been amalgamated into Investment Performance. The Board was informed that the register would be reviewed and updated at every Board meeting.

Performance Monitoring Report 2024/25 Full Year

The Board received the Performance Monitoring Report for the 2024/25 financial year, which assesses the Bromley Pension Fund's compliance with The Pensions Regulator's Code of Practice on Governance and Administration. The report noted that the administration of the Pension Fund by Liberata UK Ltd is monitored through monthly service reviews and quality checking processes. The report indicated generally strong service standards, with a low number of complaints. Key tasks completed by Liberata included the annual pension increase exercise, the issuance of annual benefit statements, and the processing of life certificates for pensioners residing abroad. The report also detailed Key Performance Indicators (KPIs) for various administrative processes, including general queries, retirements, transfers, and deaths, with most areas meeting or exceeding their targets. The analysis of Fund membership data showed a consistent increase in total membership throughout the year.

Report from the Pensions Committee - 27 February 2025

The Board was recommended to review the minutes and reports from the Pensions Committee meeting held on 27 February 2025. This review is part of the Board's oversight function. The report included the minutes of the Pensions Committee meeting held on 14 November 2024, the Pension Fund Performance Q3 2024/25, the Pension Administration Strategy, and key developments in the Local Government Pension Scheme (LGPS) expected over the next five years.

During the Pensions Committee meeting on 27 February 2025, a question was raised by Gill Slater, a Local Pension Board Member, regarding the Investment Strategy Statement's policy on environmental, social, and corporate governance (ESG) matters. Ms. Slater questioned whether it was time to consider divestment from oil majors, given their proposed increase in oil and gas production and the increasing urgency of climate change. The Committee noted that while they employ active managers with strong ESG policies, they have refrained from adopting blanket bans on investments in individual companies or sectors, preferring to challenge managers and influence company behaviour. The Committee acknowledged the ongoing debate on how ESG matters are reflected in the investment strategy and the need to balance these considerations with fiduciary duty.

The Committee also approved the Pension Administration Strategy 2024. This strategy outlines the responsibilities and performance standards expected of both the administering authority and scheme employers, aiming to promote good working relationships and improve efficiency. A key change noted was the potential for charging employers for additional administration costs incurred due to poor performance, such as submitting incomplete or inaccurate returns.

The Committee also received a presentation from Baillie Gifford representatives regarding the Bromley Pension Fund's investments. Concerns were raised by a Member regarding the short- to medium-term performance of the Portfolio and changes to the stock portfolio. Baillie Gifford explained that the challenging investment climate, marked by market concentration and detachment from valuation markers, had led to additions in the 'Disrupter' category and increased holdings in NVIDIA. The Committee requested further details on Baillie Gifford's enhanced investment risk work and the overall performance of the Fund's investments with this manager since its inception.

The Committee also noted the Pension Fund Performance Q3 2024/25 report, which indicated that the total fund return for the third quarter was 5.59% against a benchmark of 5.13%. The report highlighted that the underperformance of Global Equity portfolios had impacted overall returns. The Committee discussed the relative merits of active versus passive fund management, with a Member suggesting that a passive equity manager be approached to present to the next meeting.

The Committee approved the Pension Administration Strategy 2024. Reports concerning the extension of Pension Fund Performance Measurement Services and the procurement of a Pensions Administration System were withdrawn from the agenda.

In a Part 1 (Public) update, the Chairman noted that there was no proposal for the Bromley Pension Fund to reduce employer contributions, unlike the Royal Borough of Kensington and Chelsea, and that employer contributions would be considered as usual as part of the upcoming triennial pension valuation.